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Can you see the wood for the trees? An update on the Nagoya Protocol

In March 2015, the UK government published legislation outlining how it will police the Nagoya Protocol– a piece of international law relating to the use of genetic resources, derived from the Convention on Biological Diversity – and what the penalties for non-compliance will be. We have outlined below the potential relevance of these provisions for everyone conducting biological research in the UK, and the uncertainty that remains about exactly what will be required.

What is the Nagoya Protocol?

The Nagoya Protocol is a recently implemented piece of international law, which has the aim of stopping so-called “bio-piracy” of genetic resources and of the traditional knowledge associated with those genetic resources. As outlined in the Protocol, a genetic resource is defined as any material of plant, animal, microbial or other origin containing functional units of heredity. However, human genetic resources are excluded from the requirements of the Protocol.

A hypothetical example of what the Protocol is aiming to stop would be the removal of and research into the antimicrobial properties of a moss found in an isolated cave in, say, Madagascar, which the indigenous population has used for generations as a wound binding. Previously, there would have been no need to obtain prior consent to undertake this work and no need to compensate the local community – this is likely to be seen as bio-piracy. Under the Protocol, consent from the local community and authorities in Madagascar would be required, and compensation (the level of which will be decided on a case-by-case basis) will have to be provided or promised.

Although it is widely agreed that the Protocol has a noble cause, despite the legislators’ best efforts there are a number of ambiguities about its implementation and so it is not yet clear exactly what action will be needed to comply with its requirements.

Who will it affect?

The Protocol will affect any “user” of a genetic resource or associated traditional knowledge based in a territory that is a signatory of the Protocol. Currently, there are 91 signatories to the Protocol, which includes the European Union and its Member States. A notable absentee is the United States, and there does not appear to be any indication that it will sign the Protocol.

The Protocol makes no distinction between commercial and non-commercial users, and no distinction between small and large businesses – the application of the law is uniform to all users.

At least in the EU, the law applies to any genetic resources first accessed after 12 October 2014.

Although there will obviously be a large overlap between users of genetic resources and users of patents, the Protocol is not a law intended to just cover patent users – it applies equally to entities which do not seek to patent developments.

What is the effect?

The law requires two main actions from users: (i) the need to exercise due diligence in trying to identify whether a genetic resource that the user wants to access, or has accessed, is covered by the Protocol; and, (ii) if the genetic resource is covered by the Protocol, to ensure that the user has prior informed consent from the provider and that access permits and mutually agreed terms are in place (for example, a suitable contract) to fairly share any benefit arising from utilisation of the genetic resource.

The law requires that a user, when applying for research funding involving the genetic resource and during any final development into, say, a product including the genetic resource, declares at least that it has exercised due diligence. However, it is not yet clear exactly what those time-points are, and what will need to be demonstrated in order for the declaration to be satisfactory.

The user will have to retain the information about any access permits and mutually agreed terms for at least 20 years after the end of the utilisation, and will have to transmit that information to any subsequent users. Again, it is not clear at what time utilisation ceases (whether it is the date at which the user is no longer removing the genetic resource from its original location or when the research and development into the genetic resource finishes) and who a subsequent user may be (although it could be envisaged that this might be a licensee of the technology and/or a customer who receives a product including the genetic resource, or a further researcher using the genetic resource).

The requirement for a user to demonstrate that it has complied with these requirements will start on 12 October 2015.

The penalties for non-compliance and the manner in which the Protocol is to be policed are set by the territory in which the user is based. The UK has recently published its Implementing Regulations.

Those Regulations allow for civil sanctions to be applied if a user does not, for example, exercise due diligence, transmit the relevant information to a subsequent user, or make the necessary declarations regarding due diligence. It also provides powers for an “inspector” to enter, search and seize material from a premises to ascertain whether any breach of the Protocol has occurred. Penalties for non-compliance include fines and a “stop-notice”, which, whilst poorly specified, could prohibit a user from undertaking acts, presumably associated with the genetic resource, such as marketing a product, selling a product or conducting research, until corrective action is taken. Also provided for are criminal sanctions, including imprisonment for up to three months, if the user does not comply with the requirements of the civil sanctions.

The penalties for non-compliance are, at least on paper, serious. However, at this time it is difficult to predict how the Protocol will be enforced, especially in the early days during which it is unclear how a user is meant to behave.

What should you do?

Legislators in both the EU and the UK have reassured users that the requirements of Nagoya will not require changes in practice that will be overly onerous or expensive. However, given the present uncertainties it is difficult to see how that will be the case. The legislators have also promised to provide a “Best Practice” to outline how users should act to ensure compliance, but this is yet to materialise. Needless to say, a large number of groups that represent potential users (including, in the UK, The Chartered Institute of Patent Attorneys) are putting significant pressure on the relevant governmental and legislative organisations to provide that Best Practice and to provide further detail on how compliance with the Protocol should be dealt with.

Additionally, the Protocol provides for the existence of a “Certificate of Compliance” which can be used to evidence a user’s compliance with the requirements of the Protocol. As of yet, no such certificates are in existence, and it is not apparent by whom they will be issued. Authorised collections of accessible and already-compliant genetic resources are also envisaged, but none are yet in existence. Lastly, there is an online “Clearing House” to provide information about the requirements for obtaining consent in each territory, but this is, as of yet, scant on detail.

With the promise of these tools to aid compliance, it should be expected that, over time, the Protocol will become less of a burden, and that the steps required for compliance can be seamlessly woven into most entities’ research and development pipelines. However, there is no denying that at this time users and potential users of genetic resources have been left in the dark.

Given the unknowns outlined above, and the potential seriousness of non-compliance, we recommend that any entity that may be a user of a genetic resource acts in a proactive manner now to collect the following information about any resource that it has accessed after 12 October 2014:

identify if a genetic resource has been used in the invention, product or process;

identify the country in which the resource was accessed, and when; and,

document a description of how the genetic resource will be used, and if any third party (e.g. a subsequent user) has been given access to that genetic resource.

Once armed with that information, a legal advisor in the territory from which the genetic resource was obtained should be approached to ascertain whether that territory has any requirement for prior consent to be obtained under the Protocol and, if so, what form that consent should take. There is an online listof apparently governmental and quasi-governmental bodies that could be approached, including email addresses. It goes without saying that, before any details of an invention to which a patent application is yet to be filed are disclosed to a third party, a suitable non-disclosure agreement should be in place. We would recommend filing a patent application first.

“Mutually agreed terms” are likely to affect the timing, and possibly even ownership, of patent applications.

Over the coming months, the impact and practical aspects of the Protocol should become clearer. However, at this time of uncertainty a user of a genetic resource should tread carefully, to avoid being tripped up later.

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